Bahrain Economic Outlook

September 3, 2019

Economic growth likely slowed in the first half of this year, dragged on by the government’s fiscal consolidation efforts, which helped to reduce the fiscal deficit by nearly 38% in Bahraini dollar terms, and the introduction of a 5% VAT in January which will have weighed on private consumption growth. Moreover, as Bahrain complies with the OPEC+ agreement, oil production was likely stable, although output rebounded in annual terms in Q1 due to maintenance work at the offshore Abu Sa’afah field which had limited production in Q1 2018. More positively, merchandise exports increased at a strong year-on-year pace in H1. Moreover, turning to the third quarter, merchandise exports continued to grow robustly in July; however, lower oil prices bodes poorly for both exports and public finances.

Bahrain Economic Growth

Growth is expected to moderate this year due to constrained government spending and weaker household spending growth, while volatile oil prices cloud the outlook. Nonetheless, financial support from Gulf allies, the completion of Alba’s Line 6 expansion project and continued infrastructure spending will underpin growth. FocusEconomics analysts expect growth of 2.0% in 2019, which is unchanged from last month’s forecast, and 2.2% in 2020.

Sign up for our newsletter

Cookies Policy: We use third-party cookies to improve our services by analyzing your browsing habits.
By continuing to use this website you are giving consent to cookies being used. For more information on cookies and how you can disable them, see our "Cookies Policy".
Close